A  DEPARTMENT 

MUNICIPAL  AUDIT  AND  EXAMINATION 


REPORT  ON  AN  INVESTIGATION 

OF  THE 

OFFICE  OF  COMMISSIONERS  OF  ACCOUNTS 
NEW  YORK  CITY 


PUBLISHED  BY  PERMISSION 

THE  COMMISSIONER  OF  ACCOUNTS 
BY  THE 

BUREAU  OF  MUNICIPAL  RESEARCH 

PRIVATE  CIRCULATION 


New  York,  1907 


INDEX 


Accounting  methods  of  New  York  City.   3,  25 

Accounts,  commissioners  of   5 

Importance  and  powers  of  office  3,8,  30 

Bureau's  recommendations  adopted   3 

Origin  of  office   6-9 

How  office  is  now  organized   9 

Its  engineering  bureau  superfluous  n-13,  31 

Volume  and  character  of  work,  1885-1907   13-15 

Other  offices  use  its  men  17,  31 

Extravagant  methods  :  futile  audits   17 

Lacks  discipline ;  one  tardiness  record   17-19 

Field  work  not  supervised  20,  34 

Records  now  kept  by  office  21,  34 

Duplicate  records  of  other  offices;  does  not  audit  21-24,  29 

Efficiency  of  staff   26 

Irregularities   26 

Possibilities  of  office   28 

Changes  in  organization  suggested   31-35 

Changes  in  method  suggested :  supervising  field  work,  checking 
reports,  filing  working  papers;  abolition  of  squads;  introduction 

of  time  sheets  , . . .  34-35 

Bureau  of  Municipal  Research  

History  ;  purposes ;  report  Cover 

Trustees   4 

Administrative  council   4 

Seeks  effective  publicity   3 

Invited  to  make  this  report  ;   5 

Cook,  auditor,  board  of  education 

Member  Hertle,  Cook  and  Decker;  significance   27 

Chamberlain,  city  7,  8,  21-23 

Comptroller,  city...  7,  8,  21-23.  28,  31 

Debt,  city;  records  not  audited    22 

Exhibits  are  omitted  from  this  edition  

Hertle,  Cook  and  Decker;  significance   27 

Licenses,  bureau  of;  defective  records   23-25 

Low,  mayor;  work  of  commissioners  under  15,  16 

McClellan,  mayor  3,  15*  28 

McCloskey,  J.  A.;  tardiness  and  absence  record   18-19 

Mayor's  office;  charter  powers  of  audit  7,  28-30 

Mitchel,  John  Purroy,  commissioner  of  accounts   3 

Municipal  government;  inefficiency  fosters  waste  and  corruption. . . .  3 

Salaries  and  grades  commission   16 

Van  Wyck,  mayor;  work  of  commissioners  under   15 


A  DEPARTMENT 

OF 

MUNICIPAL  AUDIT  AND  EXAMINATION 


REPORT  ON  AN  INVESTIGATION 

OF  THE 

OFFICE  OF  COMMISSIONERS  OF  ACCOUNTS 
NEW  YORK  CITY 


PUBLISHED  BY  PERMISSION 
OF 

THE  COMMISSIONER  OF  ACCOUNTS 

BY  THE 

BUREAU  OF  MUNICIPAL  RESEARCH 

FOR 

PRIVATE  CIRCULATION 


New  York,  1907 


Avery  Architectural  and  Fine  Arts  Library 
Gift  01  Sn  \iour  B.  Durst  Old  York  Library 


FOREWORD 


The  critics  of  American  municipal  government  charge  it 
with  waste,  extravagance  and  corruption.  Progress  in  correcting 
these  faults  has  been  groping  and  patchy,  because  it  has  not 
been  clearly  understood  that  waste,  extravagance,  and  corrup- 
tion are  fostered  by  inefficiency. 

Because  no  governing  body  can  be  efficient  unless  it  is  in- 
formed, a  requisite  to  efficient  (so-called  good)  government  is 
a  mechanism  that  will  keep  citizen  and  official  currently  in- 
formed as  to  what  government  is  actually  doing,  methods  em- 
ployed, results  attained  by  those  methods  and  community  needs 
not  met.  Given  such  mechanism,  this  Bureau  believes  that 
public-spirited  officials,  civic  bodies  and  the  press  will  be  able 
to  translate  obscure  and  misleading  public  records  into  an  in- 
telligible and  illuminating  story;  to  photograph  official  function 
and  political  performance  side  by  side ;  to  make  public  opinion 
itself  expert  in  determining  the  value  of  official  service  and  ad- 
ministrative method. 

The  following  study  shows  that  neither  the  officers  nor  the 
citizens  of  New  York  City  can  know  at  present  the  essential 
facts  as  to  what  municipal  government  is'  doing  to  meet  obvious 
community  needs ;  that  for  want  of  information  the  municipal 
government  of  New  York  City  is  far  less  efficient  than  it  should 
be;  that  because  of  inefficiency  there  is  waste  of  taxes,  and  in- 
ferentially  a  vast  amount  of  preventable  sickness,  discomfort, 
criminality  and  industrial  incapacity;  that  the  most  effective 
(potentially)  agency  provided  by  the  charter  of  Greater  New 
York  for  producing  information  and  for  ensuring  efficiency  is 
the  audit  and  investigating  department  known  as  the  office  of 
commissioners  of  accounts. 

After  carefully  examining  the  report  Mayor  McClellan  au- 
thorized and  instructed  John  Purroy  Mitchel,  Commissioner  of 
Accounts,  to  give  effect  to  its  recommendations.  With  the  per- 
mission of  Commissioner  Mitchel  we  are  printing  a  few  copies 


for  private  distribution  to  illustrate  (i)  the  need  for  municipal 
research;  (2)  the  welcome  reports  receive  from  city  officials 
when  based  upon  scientific  investigation;  and  (3)  the  appeal 
that  the  need  for  municipal  research  in  all  cities  of  the  United 
States  should  make  to  men  of  means  earnestly  desiring  to  im- 
prove American  municipal  government. 

BUREAU  OF  MUNICIPAL  RESEARCH 


Trustees, 

Edwin  R.  A.  Seligman, 

Chairman 

Frank  Tucker,  Vice-Chairman 
R.  Fulton  Cutting,.  Treasurer 
Richard  Watson  Gilder 
George  McAneny 
Albert  Shaw 
Carroll  D.  Wright 


Administrative  Council 
William  H.  Allen,  Secretary 
Henry  Bruere,  Director 
Frederick  A.  Cleveland,  Tech- 
nical Director 
Rufus  E.  Miles 
William  R.  Patterson 


Address 

MADISON   SQUARE  P.  O.,  NEW  YORK  CITY 


Telephone  2709  Gramercy 


Authority  for  Investigation 

On  June  14th,  1907,  the  Commissioners  of  Accounts,  Hon. 

John  C.  Hertle  and  Hon.  John  Purroy  Mitchel,  addressed  the 

following  letter  to  the  Bureau  of  Municipal  Research: 

"It  is  our  intention,  and  the  wish  of  his  Honor,  Mayor 
McClellan,  to  so  organize  the  office  of  the  commissioners  of 
accounts  that  it  will  fulfil  in  the  most  effective  manner  pos- 
sible the  functions  imposed  upon  it  by  the  charter. 

'By  the  appointment  of  a  lawyer  in  association  with  a 
certified  public  accountant,  as  commissioners,  the  mayor  has 
signified  his  determination  to  make  this  office  an  active  agency 
for  carrying  out  the  program  of  research  and  investigation 
which  will  show  where  the  government  of  the  city  should  be 
strengthened  and  its  efficiency  increased. 

To  make  more  extensive  and  thorough  its  periodical  ex- 
aminations of  departmental  records  and  accounts,  it  will  be 
necessary  for  this  office  to  strengthen  its  organization. 

To  accomplish  these  purposes,  we  formally  invite  the 
co-operation  of  the  Bureau  of  Muncipal  Research  in  under- 
taking a  thorough  and  exhaustive  examination  and  study  of 
the  history  of  our  office,  its  present  activities,  methods  of 
work,  and  organization. 

Trusting  that  it  will  be  possible  for  the  Bureau  to  co- 
operate with  us  in  this  matter,  and  assuring  you  of  our  ap- 
preciation of  your  past  co-operation,  we  remain, 

Respectfully, 
(Signed)  John  C.  Hertle, 

John  Purroy  Mitchel, 
Commissioners  of  Accounts." 

The  Bureau  replied: 

"The  Bureau  of  Municipal  Research  welcomes  this  oppor- 
tunity for  co-operation  with  your  office,  because  it  believes 
that  the  office  of  the  commissioners  of  accounts  possesses 
a  very  valuable  opportunity  for  promoting  the  efficient  gov- 
ernment of  this  city.  We  shall  make  arrangements  to  begin 
our  active  co-operation  in  a  study  of  your  office  at  the  earliest 
possible  date,  which  we  trust  will  be  sometime  in  the  coming 
week. 

Yours  very  truly, 

(Signed)  Henry  Bruere 

Director." 

In  accordance  with  the  request  of  the  commissioners  and  the  Bu- 
reau's reply  an  examination  of  the  office  of  the  commissioners 
of  accounts  was  begun  by  the  agents  of  the  Bureau  in  July,  1907. 

Scope  of  the  Examination 

With  the  full  co-operation  of  the  commissioners,  the  chief 
accountant,  the  chief  examiners,  and  the  chief  of  the  engineer- 
ing bureau,  inquiry  was  extended  to  the  following  subjects: 


6 


COMMISSIONERS  OF  ACCOUNTS 


(a)  Examination  of  the  statutes  and  of  the  charter  under 
which  the  office  of  the  commissioners  of  accounts 
is  organized  and  conducted. 

(b)  Inquiry  as  to  the  present  organization  of  the  office. 

(c)  Interview  with  the  chief  of  the  engineering  bureau 
and  his  assistants  respecting  the  purposes  and 
methods  of  this  bureau,  and  an  examination  of  the 
methods  employed  in  the  work  of  the  chemical  and 
physical  laboratories. 

(d)  Examination  of  the  office  records  and  files 
and  examination  and  tabulation  of  reports  for  the 
purpose  of  ascertaining  the  volume  and  character  of 
work  performed  by  the  commissioners  of  accounts 
from  1885  to  1906. 

(e)  Examination  and  analysis  of  the  pay-rolls  of  the 
office  for  the  year  1906  for  the  purpose  of  deter- 
mining the  time  employed  andjthe  expense  involved 
in  making  the  several  audits  and  examinations  con- 
ducted during  that  year. 

(f)  Interviews  with  the  commissioners  and  chief  ac- 
countant respecting  the  method  of  conducting  the 
office. 

(g)  Interviews  with  each  of  the  chief  examiners  as  to 
the  methods  employed  by  them  in  making  audits 
and  examinations  in  the  several  departments  of  the 
city. 

(h)  Examination  of  the  accounts,  conditions  and 
methods  as  they  exist  in  the  several  departments 
where  audits  were  made. 

(i)  Interviews  with  the  accountants  and  examiners  for 
the  purpose  of  determining  their  qualifications  and 
efficiency. 

(j)  Discussion  with  the  commissioners,  chief  account- 
ant, chief  examiners,  chief  of  the  engineering  bu- 
reau, and  accountants  and  examiners  employed  in 
the  office  as  to  the  manner  in  which  the  work  of  the 
department  might  be  extended  and  improved. 

(A)  Statute  and  Charter  Provisions  Governing  the  Office 

The  office  of  the  commissioners  of  accounts  had  its  origin 
in  the  disclosures  of  the  Tweed  scandals.  Through  the  efforts 
of  Samuel  J.  Tilden  and  Charles  O'Connor,  leading  members  of 
the  Committee  of  Seventy,  a  law  establishing  the  office  was 
passed  by  the  legislature  in  1873.  The  motive  of  its  establish- 
ment was  to  provide  a  means  of  preventing  a  combination  of 
the  city  officials  (such  as  comptroller  or  chamberlain,  or  either 


ORIGIN  OF  OFFICE 


7 


of  them)  with  any  other  person  or  persons  for  the  purpose  of 
looting  the  city  treasury.  By  the  law  above  referred  to,  an 
office  was  created  which  would  be  independent  of  all  the  other 
departments,  and  which  would  be  responsible  for  the  correctness 
of  the  accounts  and  for  the  detection  of  irregularities  and  of 
unauthorized  or  fraudulent  practices.  The  incumbents  of  this 
office  were  to  be  appointed  by  the  mayor,  and  removable  at  his 
pleasure.  This  power  was  upheld  by  a  decision  of  the  court  of 
appeals,  November  9th,  1880. 

The  act  establishing  this  office  of  the  commissioners  of  ac- 
counts reads  as  follows : 

"The  mayor  shall  from  time  to  time  appoint  and  remove  at 
pleasure  two  persons  who,  together  with  the  President  of  the 
department  of  taxes  and  assessments,  shall  be  commissioners 
of  accounts.  It  shall  be  their  duty  once  in  three  months  and 
oftener  if  they  deem  it  proper,  to  examine  all  vouchers  and 
accounts  in  the  offices  of  the  comptroller  and  chamberlain  to 
make  and  publish  in  the  City  Record  a  detailed  statement  of 
the  financial  condition  of  the  city,  showing  the  amount  of  its 
funded  and  floating  debt,  the  amount  received  and  expended 
since  the  past  preceding  report,  with  the  classification  of  the 
sources  of  revenue  and  expenditure  and  such  other  informa- 
tion as  they  shall  deem  proper.  They  shall,  from  time  to  time, 
make  an  examination  of  the  expenses  of  the  several  depart- 
ments and  officers,  and  make  such  recommendations  to  the 
board  of  apportionment  and  other  officers  with  reference 
thereto  and  particularly  with  reference  to  salaries  and  duties 
as  they  deem  advisable.  Any  one  of  such  commissioners 
shall  have  authority  at  any  time  to  make  such  examination, 
and  such  two  appointed  commissioners  shall  be  paid  a  reason- 
able compensation  to  be  fixed  as  other  expenditures  by  the 
board  of  apportionment,  not  exceeding  $3,000  each  annually." 

This  measure  was  found  to  be  inadequate.  Authority  to 
examine  was  limited  to  vouchers  and  accounts  and  the  evidences 
of  record  supporting  them.  The  frauds  to  be  detected  were 
those  which  usually  left  no  trace  of  irregularity  in  the  voucher 
files  and  accounts.  To  reach  such  evidence,  it  would  be  neces- 
sary to  give  to  the  commissioners  of  accounts  authority  to  sub- 
poena witnesses,  to  examine  them  under  oath,  and  to  have  pro- 
duced as  evidence  the  books  and  papers  of  persons  dealing  with 
the  city.  An  amendment  was,  therefore,  passed  in  1882,  en- 
larging the  powers  of  the  commissioners,  an  excerpt  from  which 
follows : 

"For  the  purpose  of  ascertaining  facts  in  connection  with  these 
examinations,  they  (the  commissioners  of  accounts)  shall  have 
full  power  to  compel  the  attendance  of  witnesses,  to  admin- 
ister oaths  and  to  examine  such  persons  as  they  may  deem 
necessary." 


8 


COMMISSIONERS  OF  ACCOUNTS 


Under  the  above  quoted  provision  of  law  it  has  been  recently 
held  that  upon  application  of  the  commissioners  setting  forth  the 
refusal  of  witnesses  to  appear  and  testify  before  them,  the  su- 
preme court  has  power  to  commit  witnesses  for  contempt.  The 
office  of  the  commissioners  of  accounts  was  given  much  the  same 
power  as  that  of  a  legislative  commission.  By  holding  authority 
to  compel  the  production  of  evidence  which  does  not  appear  in 
the  records,  the  office  of  the  commissioners  of  accounts  since 
1882  has  possessed  all  of  the  authority  necessary  (1)  to  the  pro- 
tection of  the  city  against  peculation  and  fraud,  (2)  to  make  it 
one  of  the  most  effective  branches  of  the  government. 

The  legal  provisions  above  set  forth  were  incorporated  in 
the  charter  of  consolidation  in  the  year  1898,  at  which  time  there 
was  also  added  a  clause  to  the  effect  that  at  least  one  of  the 
commissioners  should  be  a  man  trained  to  the  profession  of  ac- 
counting.   Section  119  of  the  charter  of  New  York  is  as  follows: 

"The  mayor  shall  appoint  and  remove  at  pleasure  two  persons 
who  shall  be  commissioners  of  accounts,  one  of  whom  shall 
be  a  certified  public  accountant.  It  shall  be  their  duty,  once 
in  three  months,  to  make  an  examination  of  the  receipts  and 
disbursements  in  the  offices  of  the  comptroller  and  chamber- 
lain, in  connection  with  those  of  all  the  departments  and 
officers  making  returns  thereto,  and  report  to  the  mayor  a  de- 
tailed and  classified  statement  of  the  financial  condition  of  the 
city  as  shown  by  such  examinations.  They  shall  also  make 
such  special  examinations  of  the  accounts  and  methods  of  the 
departments  and  offices  of  the  city  and  of  the  counties  of 
New  York,  Richmond,  Queens  and  Kings,  as  the  mayor  may 
from  time  to  time,  direct,  and  such  other  examinations  as  the 
said  commissioners  may  deem  for  the  best  interests  of  the 
city,  and  report  to  the  mayor  and  the  board  of  aldermen  the 
results  thereof.  For  the  purpose  of  ascertaining  facts  in 
connection  with  these  examinations  they  shall  have  full  power 
to  compel  the  attendance  of  witnesses,  to  administer  oaths 
and  to  examine  such  persons  as  they  may  deem  necessary. 
Such  commissioners  shall  each  be  paid  the  sum  of  five  thou- 
sand dollars  a  year.  The  board  of  estimate  and  apportion- 
ment and  the  board  of  aldermen  shall  annually  appropriate 
a  sum  sufficient  to  pay  the  salaries  of  said  commissioners, 
and  in  the  discretion  of  said  board  and  the  board  of  aldermen 
a  sum  sufficient  to  enable  them  to  employ  the  necessary  assist- 
ance to  carry  out  the  provisions  of  this  section." 
In  connection  with  the  office  of  city  chamberlain,  the  duties 

of  the  commissioners  of  accounts  are  specifically  set  forth  in 

section  195  of  the  charter  as  follows : 

'The  accounts  of  the  chamberlain  shall  be  annually  closed  on 
the  last  day  of  December  and  shall  be  examined  in  the  month 
of  January  in  each  year  by  the  commissioners  of  accounts. 
Such  commissioners  shall  examine  the  accounts  and  vouchers 


ORGANIZATION  OF  OFFICE 


9 


of  all  moneys  received  into  and  paid  out  of  the  city  treasury 
during  the  year  ending  on  the  last  day  of  December  next 
preceding  such  examination,  and  shall  certify  and  report  to  the 
mayor  and  board  of  aldermen  in  the  following  month  of  Feb- 
ruary the  amount  of  moneys  received  into  the  treasury  dur- 
ing such  year,  the  amount  of  moneys  paid  out  during  the 
same  period  by  virtue  of  warrants  drawn  on  the  treasury  by 
the  comptroller,  the  amount  of  moneys  received  by  the  cham- 
berlain who  shall  be  in  office  at  the  time  of  such  examination, 
if  he  entered  upon  the  execution  of  his  duties  since  the  last 
preceding  report,  the  balance  in  the  treasury  on  the  last  day 
of  December  preceding  such  examination,  the  amount  of 
moneys  borrowed  for  or  on  the  credit  of  the  city  during  such 
year  and  the  amount  of  the  bonds  of  the  city  issued  during 
each  year,  with  the  purposes  for  which  and  the  authority 
under  which  such  bonds  were  issued.  Such  commissioners 
shall  also  compare  the  warrants  drawn  by  the  comptroller  on 
the  treasury  during  the  year  ending  on  the  last  day  of  De- 
cember preceding  such  examination,  with  the  several  laws  and 
ordinances  under  which  the  same  shall  purport  to  have  been 
drawn,  and  shall  in  like  manner  certify  and  report  whether 
the  comptroller  had  power  to  draw  such  warrants,  and  if  any 
shall  be  found  which,  in  their  opinion,  he  had  no  power  to 
draw,  they  shall  specify  the  same  in  their  report,  with  their 
reasons  for  such  opinion." 

(B)  Organization  of  the  Office 

The  general  organization  of  the  office  at  June  30,  as  shown 
by  lists  furnished  by  the  commissioners  of  accounts,  is  as  follows ; 


I.  General  administration: 

(a)  Commissioners  of  accounts   2 

(b)  Chief   accountant    1 

(c)  Office  force    5  8 

II.  Audits  and  special  examinations : 


1.  Recording  comptrollers  vouchers  and  examin- 
ing   returns    from   chamberlain's    office,  under 


mandatory  provisions  of  sec.  195  : 

(a)  Examiners  of  accounts    3 

(b)  Accountants    3 

(c)  Clerks    2  8 

2.  Audit  of  books  of  city  courts  : 

(a)  Chief   examiner    1 

(b)  Examiners  of  accounts    4 

(c)  Accountants    6  11 

3.  Audits  and  examinations  of  other  city  departments : 

(a)  Chief   examiners    5 

(b)  Examiners  of  accounts   7 

(c)  Accountants   10 

(d)  Clerks    4  26 

in.    Detectives  attached  to  the  office   2 

iv.    Engineering  bureau : 

(a)  Chief  engineer   1 

(b)  Examining  engineers    2 

(c)  Inspectors    8 

(d)  Chemist    1 

(e)  Mechanical  laboratory    1  13 


10 


COMMISSIONERS  OF  ACCOUNTS 


v.    Permanently  assigned  to  other  offices: 


1.  Mayor's  office : 

(a)  Law   examiner    I 

(b)  Examiner  of  accounts    i 

(c)  Accountants    2 

(d)  Clerks    1 

2.  Salaries  and  grades  commission : 

(a)  Chief   examiner    1 

3.  Corporation  counsel : 

(a)  Chief   examiner    1  7 

Total  number  employed  in  office   75 


Under  the  commissioners,  the  general  administration  of 
the  office  is  directed  by  a  chief  accountant,  who  in  their  absence 
represents  the  commissioners.  Upon  him  rests  responsibility 
for  the  form  and  phraseology  of  the  reports  submitted  by  the 
chief  examiners,  but  he  exercises  no  supervision  over  the  work 
of  the  examining  force.  The  office  force  consists  of  a  chief 
clerk  who  has  charge  of  the  records  and  files,  two  stenographers 
and  two  office  boys.  The  audits  and  special  examinations  of 
departments  are  conducted  under  the  direction  of  chief  exam- 
iners, of  whom  there  are  eight  at  present  on  the  pay-roll  of  the 
office.  Two  of  the  chief  examiners,  however,  are  at  this  time 
assigned  to  special  work  not  under  the  direction  of  the  commis- 
sioners of  accounts,  and  which  does  not  involve  supervision  of 
any  part  of  the  working  staff.  Under  the  direction  of  the  chief 
examiners,  examiners  of  accounts  and  accountants  are  assigned 
to  perform  the  actual  work  of  departmental  audits  and  investiga- 
tions. The  six  chief  examiners  at  this  time  in  charge  of  depart- 
mental examinations,  are : 

1.  Edward  F.  Boyle,  in  charge  of  the  audit  of  the  bureau 
of  licenses,  municipal,  magistrates,  special  sessions,  county 
surrogates  and  city  courts; 

2.  Wood  D.  Loudoun,  in  charge  of  the  examination  of  the 
offices  of  the  borough  presidents  and  the  department  of 
parks ; 

3.  John  W.  Booth,  who  supervises  the  audit  of  the  police 
department  and  the  department  of  docks  and  ferries ; 

4.  Frank  P.  White,  supervising  the  audit  of  the  department 
of  water  supply,  gas  and  electricity  and  the  fire  department; 

5.  Rudolph  Holde,  supervising  the  audit  of  the  department 
.of  corrections,  department  of  public  charities  and  Bellevue 
and  allied  hospitals ; 

6.  James  A.  McGinley,  in  charge  of  various  special  audits  and 
examinations,  during  the  year  T906  having  examined  the 
pound  master  of  the  Bronx,  the  department  of  health, 
receiver  of  taxes,  Brooklyn  licenses  and  permits,  depart- 
ment of  parks,  Manhattan  and  Richmond. 


ENGINEERING  BUREAU 


ii 


The  two  remaining  chief  examiners  who  are  reported  by 
the  commissioners  as  assigned  to  other  offices  are  as  follows: 
J.  L.  M.  Allen,  assigned  to  the  salaries  and  grades  commission 
and  R.  T.  Brennan  to  the  corporation  counsel's  office. 

In  June,  1907,  the  six  chief  examiners  were  in  charge  of 
squads  of  examiners  of  accounts,  accountants  and  clerks  as  fol- 
lows : 

To  Edward  F.  Boyle,  4  examiners  of  accounts  and  6  account- 
ants ; 

To  Wood  D.  Loudoun,  2  examiners  of  accounts,  3  account- 
ants and  1  clerk; 

To  John  W.  Booth,  2  examiners  of  accounts  and  3  account- 
ants ; 

To  Frank  P.  White,  1  accountant; 

To  Rudolph  Holde,  2  examiners  of  accounts,  1  accountant  and 
1  clerk; 

To  James  A.  McGinley,  1  examiner  of  accounts,  2  account- 
ants, 2  clerks. 

Pursuant  to  section  195  of  the  charter,  six  of  the  employes  of  the 
office  are  constantly  at  work  examining  the  vouchers  passed  for 
payment  by  the  department  of  finance.  The  squad  engaged  in 
this  work  is  as  follows :  Two  examiners  of  accounts,  two  ac- 
countants and  two  clerks  registering  and  recording  vouchers.  An 
accountant  and  an  examiner  of  accounts  are  permanently  em- 
ployed on  warrants  drawn  on  the  city  chamberlain.  Four  mem- 
bers of  the  staff  are  permanently  assigned  to  the  mayor's  office, 
where  they  are  engaged  in  registering  warrants,  revenue  bonds 
and  corporate  stock.  The  law  examiner  is  also  attached  to  the 
mayor's  office,  to  investigate  the  mayor's  marshals. 

(C)  The  Engineering  Bureau 

The  engineering  bureau  is  under  the  immediate  charge  and 
direction  of  Chief  Engineer  Otto  H.  Klein.  The  principal  work 
of  the  bureau  is  that  of  examining  the  work  in  progress  on  streets 
and  sewers  under  contract,  and  of  making  such  special  examina- 
tions of  other  engineering  work  as  may  be  requested  by  the 
mayor.  In  the  engineering  bureau  is  also  maintained  a  chemical 
and  physical  laboratory.  On  inquiry,  it  was  represented  that 
the  method  of  conducting  the  office  of  the  engineering  bureau  is 
as  follows : 

As  contracts  are  let  by  the  bureau  of  highways  and  the 
bureau  of  sewers  in  each  of  the  city  boroughs,  the  specifications 


12 


COMMISSIONERS  OF  ACCOUNTS 


are  sent  to  the  engineering  bureau,  where  they  are  filed  for  ref- 
erence. Upon  receipt  of  notice  of  the  commencement  of  work 
under  each  of  these  contracts,  from  the  chief  engineers  of  the 
bureaus  of  highways  and  sewers,  or  from  the  president  of  the 
borough,  these  contracts  are  placed  on  the  list  of  work  in  pro- 
gress. For  the  purpose  of  informing  the  chief  of  the  bureau 
of  engineering  as  to  the  work  to  be  currently  inspected,  a  pencil 
memorandum  is  kept  in  the  office  upon  which  are  indicated  the 
contracts  under  construction  and  the  daily  assignments  of  in- 
spectors to  the  work.  Inspectors  so  assigned  report  daily  inspec- 
tions made,  noting  in  such  daily  reports  the  contract  inspected, 
the  nature  of  the  work  in  progress,  whether  an  inspector  of  the 
bureau  of  highways  or  the  bureau  of  sewers  was  present,  and 
whether  any  violation  of  contracts  was  noted.  The  inspectors 
are  also  relied  upon  to  bring  to  the  office  samples  of  material 
used  for  the  purpose  of  making  tests.  These  samples  so  re- 
turned by  the  inspectors  are  tested  in  the  chemical  laboratory, 
the  physical  laboratory,  or  both,  as  the  case  may  require.  Reports 
on  such  tests  are  made  by  the  chemist  or  by  the  head  of  the 
physical  laboratory  on  forms  provided  by  the  department.  A 
record  is  kept  of  each  contract  under  inspection  in  which  is  en- 
tered the  result  of  each  inspection  with  the  details  as  above 
referred  to,  violations  of  contract  being  registered  in  red  ink. 
When  violations  are  reported  by  the  inspectors,  an  examining  en- 
gineer is  assigned  to  make  special  inquiry,  and  in  case  the  report 
of  the  inspector  as  to  the  violation  is  supported  by  the  report  of 
the  engineer,  the  engineering  bureau  makes  a  report  on  such 
violation  to  the  commissioners  of  accounts. 

The  personnel  of  the  bureau,  together  with  the  salaries  and 
drtes  of  employment,  is  represented  by  Assistant  Engineer 
Gormly  as  follows : 

Salary   Date  of  employment 

Chief  engineer.  Otto  H.  Klein  $4,500  2-'o6 

2  Engineers   (Weltcn)    2.700  io-'o2 

(Gormly)    1,800  6-'o8 

Welton  has  charge  of  the  physical  laboratory,  makes 

inspections,  etc. 
Gormly  has  charge  of  the  office,  assigning  of  inspec- 
tors, etc. 
9  Inspectors : 

1.  Keyes   $1,500  3*'o7 

2.  Ralph    1,500  1 -'07 

3.  Fitzpatrick    1,500  6-,02 


VOLUME  AND  CHARACTER  OF  WORK 


13 


4.  McGann 
*5  Cody   . . 

6.  Moss    . . 

7.  Frank  . 

8.  Kuhn  . . 
tg.  Tracey 


1,800 
1,800 
1,500 
1,500 
i;8oo 
1,200 


io-'o4 
6-'o5 

12-06 
4J04 

2-'04 

6-'98 


1  Laborer — Miller 

Skilled  mechanic,  in  charge  of 


1    Chemist — Peckham 


cement  laboratory 


1,200 
2,000 


6-'o3 
6-'98 


(D)  Volume  and  Character  of  Work  Performed  by  the  Com- 
missioners of  Accounts 

An  examination  was  made  of  the  office  records  and  files 
for  the  purpose  of  ascertaining  the  volume  and  character  of  the 
work  performed  by  the  commissioners  of  accounts  from  1885  to 
date.  In  the  tabulation  of  results,  distinction  is  made  between 
''audits"  and  "financial  examinations."  This  distinction  is  one 
used  in  the  office,  an  "audit"  being  understood  as  limited  to  a 
verification  of  the  accounts,  while  a  "financial  examination"  is 
understood  to  include  an  examination  into  and  comparison  of 
financial  results,  usually  in  the  nature  of  a  report  on  some  special 
phase  of  the  city's  business. 

t  Noted  in  the  civil  list  as  examiner  of  accounts 
*  Noted  in  the  civil  list  as  transferred  to  corporation  coun- 
sel's office 


14  COMMISSIONERS  OF  ACCOUNTS 

TABLE  OF  WORK  DONE  BY  THE  COMMISSIONERS  OF  ACCOUNTS 
DURING  THE  YEARS  1885-1897  and  1898-1906 


Period  before  consolidation,  1885-1807 


Classification  of  reports 

Years 

Total 

85 

86 

87 

88 

89 

90 

91 

92 

93 

94 

95 

96 

97 

Audit  

2 

6 

2 

19 

5 

4 

2 

1 

6 

8 

1 

13 

5 

74 

Financial  examination 

2 

7 

10 

5 

3 

7 

7 

5 

1 

1 

7 

7 

8 

70 

Method  

2 

4 

1 

1 

2 

4 

3 

3 

2 

3 

25 

11 

7 

7 

10 

4 

4 

1 

7 

2 

4. 

8 

4 

4 

73 

1 

2 

1 

4 

Estimate  

_ 

Engineering 

Tests  and  analyses  .  . 

Contract  and  construc- 

3 

1 

1 

3 

8 

Wm 

Total  

17 

28 

20 

34 

14 

17 

16 

13 

12 

16 

16 

28 

23 

254 

Period  after  consolidation,  1808-1006 


Classification  of  reports 

Years 

Total 

98 

99 

00 

01 

02 

03 

04 

05 

06 

Audit  

24 

79 

82 

44 

74 

60 

82 

79 

78 

602 

Financial  examination 

19 

45 

47 

90 

54 

38 

22 

16 

18 

349 

5 

26 

22 

3 

8 

3 

4 

5 

3 

79 

33 

14 

36 

5 

54 

14 

17 

23 

10 

206 

2 

9 

1 

5 

4 

6 

18 

15 

60 

14 

14 

71 

75 

4 

103 

102 

1 

384 

Engineering 

Tests  and  analyses  .  . 

14 

46 

6 

3 

24 

28 

12 

28 

14 

175 

Contract  and  construc- 

41 

34 

21 

21 

18 

34 

11 

6 

13 

199 

Total  

152 

267 

285 

242 

241 

181 

257 

277 

152 

2054 

For  details  see  exhibit  A* 
*F,xhibits  are  omitted  from  this  abridged  edition 


VOLUME  AND  CHARACTER  OF  WORK 


15 


PROPORTION  OF  DEPARTMENTS  AND  INSTITUTIONS  INVESTI- 
GATED  TO  TOTAL.   NUMBER    OF  DEPARTMENTS  AND 
INSTITUTIONS  SUPPORTED  BY  CITY— 1898-1906 


City  departments 

Private  institutions  receiving 
city  money 

Year  and 
administration 

Number 

Audited 

Not 
Audited 

i  not 
Audited 

Number 

Audited 

Not 
Audited 

1c  not 
Audited 



Mayor  Van  Wyck 

1898  

92 

17 

75 

81.53 

196 

2 

194 

98.98 

1899   

103 

19 

84 

81.56 

108 

18 

90 

83.34 

1900   

103 

33 

70 

67.96 

178 

1 

177 

99.41 

1901  

110 

28 

82 

74.55 

141 

141 

100.00 

Average  .  .  . 

102 

24 

78 

76.47 

155 

4 

151 

97.42 

Mayor  Loiu 

1902   

124 

27 

97 

78.23 

140 

140 

100.00 

1903   

124 

23 

101 

81.46 

139 

139 

100.00 

Average  .  .  . 

124 

25 

99 

79.84 

140 

140 

100.00 

Mayor  McClellan 

1904   

124 

20 

104 

83.87 

140 

140 

100.00 

1905   

124 

17 

107 

86.29 

135 

135 

100.00 

1906  

124 

17 

107 

86.29 

133 

133 

100.00 

Average  .  .  . 

124 

18 

106 

85.49 

136 

136 

100.00 

Mayors  Van  Wyck, 
Lo~cv,  McClellan   .  . 

114.22 

22.88 

91.34 

79.27 

143 

2 

141 

98.71 

FREQUENCY  OF  AUDIT  DURING  NINE  YEARS— 1898-1906 


Items 

Van  Wyck 

low 

McClellan 

Period 

1898-1900 

1901-1902 

1903-1906 

1898-1906 

Average  No.  of  city  departments  .  .  . 



102 

124 

124 

114.22 

78 

99 

106 

91.34 

24 

25 

18 

22.88 

28 

13 

9 

24 

7 

16 

9 

14 

9 

9 

7 

6 

3 

0 

0 

5 

4 

5 

16  COMMISSIONERS  OF  ACCOUNTS 

(E)  Examination  and  Analysis  of  Pay-roll  for  the  Year  1906 

Seeking  to  determine  the  cost  of  making  audits  and  exami- 
nations of  different  departments  by  the  office  of  commissioners  of 
accounts,  a  complete  analysis  was  made  of  the  time  sheets  for 
the  year  1906.  In  making  this  analysis,  serious  difficulty  was 
experienced  on  account  of  the  inadequate  information  in  the 
office  from  which  it  might  be  determined  where  an  employee 
was  engaged  and  in  some  instances  whether  he  was  em- 
ployed at  all.  Frequently,  men  were  reported  as  working  on  two 
different  squads  at  the  same  time.  Again,  certain  time  sheets 
were  missing  from  the  office,  in  which  cases  the  time  is  shown 
in  the  analysis  as  "unaccounted  for."  Where  there  was  no 
record  of  employment  on  the  time  sheets  on  which  the  name  of 
the  employee  appeared,  or  where  the  employee  was  noted  as 
"sick,"  "excused"  or  "absent,"  this  time  has  been  classified  as 
"unemployed."  Where  the  time  sheets  gave  the  fact  of  employ- 
ment but  not  the  place  where  the  employee  worked,  this  time  has 
been  noted  as  "undistributed." 

As  a  result  of  the  analysis,  (given  in  detail  and  summary, 
Exhibit  C,)  several  general  facts  are  to  be  noted: 

(1)  That  with  a  total  pay-roll  cost  of  about  $143,- 
000,  not  to  exceed  $110,000  was  actually  spent  in  the 
proper  work  of  the  department,  even  when  the  time 
shown  as  "unaccounted  for,"  "unemployed"  and  "undis- 
tributed" is  included.  That  is,  over  $30,000  of  the 
budget  allowance  to  this  department  was  used  for  other 
departments. 

(2)  That  following  the  custom  instituted  during  the 
Low  administration,  $5,485.11  of  the  appropriation  to 
the  office  of  the  commissioners  of  accounts  was  used  for 
bookkeeping  in  the  mayor's  office;  $4,388.17  was  defin- 
itely located  as  having  been  used  in  clerical  service  for 
the  salaries  and  grades  commission;  about  $500  was 
used  on  work  for  the  corporation  counsel  and  $20,551.67 
was  used  for  inspections  on  work  in  progress,  which 
should  have  been  inspected  by  the  comptroller. 

(3)  That  less  than  $70,000  was  definitely  located  as 
having  been  consumed  in  the  actual  work  of  audits  and 
examinations,  about  $18,000  having  been  spent  for  gen- 
eral administration,  $11,300  appearing  as  undistributed, 
$10,500  as  unemployed  and  $2,700  as  unaccounted  for. 


OTHER  OFFICES  USE  ITS  MEN 


17 


In  the  analysis  of  cost  of  making  audits  and  examinations 
by  departments  two  results  are  shown:  (1)  The  cost  actually 
distributed  as  it  appears  on  the  time  sheets;  (2)  The  actual  cost 
plus  a  loading  sufficient  to  cover  general  administration  and  the 
undistributed,  unemployed  and  unaccounted  for  time,  as  follows: 


Departments  Examined 

Cost  Actually 
Distributed 

Loaded  to  Cover 
Undistributed  Cost 

Finance 

$18  ^8  16 

$30,620.96 

Water  supply,  gas  &  electricity 

. .  2,180.52 

3',597-85 

.  .  1,204.5;, 

2,087.00 

. .  3748.97 

6,185.80 

. .  1,231.17 

2,031.43 

. .  4,623,73 

7,629.16 

Parks   

•  4,04935 

6,681.43 

Health   

771.45 

1,272.89 

403-42 

665.64 

Bellevue  &  allied  hospitals... 

. .  3,068.29 

5,062.68 

Charities   

. .  2,752.24 

4,54L20 

Courts   

. .  14,450.44 

23,843.23 

581.93 

960.18 

Street  cleaning   

. .  2,296.01 

3,953-42 

. .  3,131.11 

5,166.33 

Other  examinations   

..  3,638.98 

6,004.32 

$66,850.62 

$110,303.52 

This  analysis  is  significant.  The  actual  located  cost  to  the 
city  of  the  examination  of  the  finance  department  as  at  present 
made  exceeds  $18,500;  the  loaded  cost  is  nearly  $30,000.  The 
amount  expended  by  the  city  for  the  audit  of  the  office  of  comptrol- 
ler would  seem  to  approximate  an  amount  sufficient  to  make  a  com- 
plete audit  of  this  department.  On  the  other  hand,  the  result 
achieved  is  not  in  any  sense  an  audit,  it  being  in  the  nature  of  a 
verification,  in  gross,  of  the  total  expenditures  and  total  receipts, 
as  shown  on  the  books  of  the  comptroller  and  the  city  cham- 
berlain, by  means  of  a  duplicate  record  kept  in  the  office  of  the 
commissioners  of  accounts. 

The  expensiveness  of  making  audits  by  the  methods  em- 
ployed is  also  illustrated  in  the  cost  of  examining  other  depart- 
ments, where  audits  were  annually  made.  Over  $3,000  is  defin- 
itely shown  as  having  been  spent  in  the  audit  of  Bellevue  and 
allied  hospitals.  When  this  distributed  cost  is  loaded  with  the 
cost  of  administration  and  the  undistributed  items  above  referred 
to,  the  cost  approximates  $5,000.  This  department  has  no 
revenue ;  expenditures  only  are  to  be  audited.    The  total  expense 


18  COMMISSIONERS  OF  ACCOUNTS 

appropriation  for  Bellevue  and  allied  hospitals  was  about  $700,- 
000.  Assuming  for  the  sake  of  the  comparison  that  the  work 
involved  in  the  audit  of  expenditures  of  this  department  is  not 
extraordinary,  it  would,  at  the  same  rate,  cost  the  city  not  less 
than  $1,000,000  per  annum  to  make  a  complete  audit  of  its  rev- 
enue and  expense  accounts.  The  cost  actually  distributed  to  the 
audit  of  the  City  Record  is  $3,131 ;  when  loaded  with  the  general 
and  undistributed  cost  above  referred  to,  this  audit  would  appear 
as  having  cost  the  city  over  $5,000,  a  rate  so  high  as  to  indicate 
that  the  audit,  even  if  thorough,  is  wasteful  and  badly  managed. 

Assuming  the  highest  efficiency,  a  study  of  the  cost  of  the 
annual  audits  of  all  departments  leads  to  the  conclusion  that  the 
management  has  not  been  economical,  and  this  conclusion  is 
borne  out  both  by  observation  of  methods  and  by  the  representa- 
tions of  the  staff  itself  as  to  methods  employed.  Moreover,  in 
many  instances  it  is  clear  that  the  audits  were  inconclusive  and 
of  questionable  value. 

That  the  office  lacks  discipline  and  a  sufficient  control  over 
its  employees  is  also  apparent.  The  following  is  the  analysis  of 
the  time  sheet  of  Mr.  J.  E.  McCloskey,  who  was  employed  on 
work  in  the  office,  where  his  absences  and  hours  of  work  might 
be  observed.  He  was  noted  as  tardy  on  32  days  out  of  his  first 
75  days,  aggregating  50  hours  and  40  minutes ;  after  this  time, 
tardiness  seems  not  to  have  been  regularly  kept  in  any  of  the 
time  sheets.  He  was  also  absent  37  days  during  the  year,  be- 
sides holidays  and  his  regular  vacation.  //  such  a  state  of  affairs 
could  prevail  under  the  very  eyes  of  the  commissioners,  little 
control  might  be  expected  over  the  men  who  were  employed  in 
the  Held. 


OFFICE  LACKS  DISCIPLINE  19 

RECORD  OF  TARDY  ATTENDANCE  OF  J.  A.  McCLOSKEY  ON 
DAYS  PRESENT  AT  THE  OFFICE  OF  COMMISSIONERS 
DURING  THE  YEAR  1906 


Week 

O  . 

Wed 

l  nurs. 

Fri. 

Sat. 

Total 

1 

H 

1.20 

.15 

.55 

1.10 

2.40 

2 

1.25 

.35 

.50 

2.50 

A% 

3 

.15 

.15 

4 

.30 

1.20 

1.00 

AV2 

E 

2.50 

5 

1.00 

1.50 

1.20 

.50 

5.00 

6 



1.15 

1.10 

2.25 

7 

H 

1.20 

1.15 

2.35 

AV2 

8 

S 

E 

H 

E 

E 



9 

A  ' 

1.15 

1.15 

1.05 

3.35 

10 

11 



3.40 

S 

S 

S 

3.40 

12 



4.00 

3.40 

7.40 

13 

14 

15 

AV2 

.20 

.40 

.60 

16 

4.15 

1.00 

5.40 

4.00 

14.55 

17 



1.15 

1.15 

18 

No  tardiness  record  kept  after  17th  week 

19 

20 
21 

22 

H 

23 

24 

25 

26 

27 



H 

 * 

28 

29 

30 

 * 

31 

32 

* 

V 

V 

V 

V 

V 

33 

*  v 

V 

V 

V 

V 

V 

* 

34 

*  v 

V 

V 

V 

V 

V 

35 

*  ? 

? 

■? 

? 

? 

? 

 * 

36 

H 

37 

38 

39 

n 

n 

.E 

40 
41 

42 

s 

s 

S 

s 

s 
s 

s 
s 

43 

s 

s 

S 

s 

s 

s 

44 

s 

s 

S 

s 

s 

s 

45 

s 

s 

s 

s 

s 

s 

46 

47 
48 

H 

49 

50.40 

50 

hrs.  min 

51 

first  17 

52 

H 

weeks 

H-Holiday 
V— Vacation 
S-Sick 


E— Excused 

A— Absent-unexcused 

*— 9  A.  M.  to  3  P.  M.  day's  work 


20 


COMMISSIONERS  OF  ACCOUNTS 


(F)  The  Method  of  Conducting  the  Office 

In  the  conduct  of  the  office  there  was  found  to  be  a  lack  of 
system  by  which  the  commissioners  and  the  chief  accountant 
might  intelligently  direct  the  examinations  and  locate  responsi- 
bility for  the  character  of  the  work  performed.  It  is  stated  by 
those  in  charge  of  the  office  that,  after  assigning  an  audit  or  in- 
vestigation to  a  chief  examiner,  both  the  method  employed  and 
the  results  to  be  obtained  are  left  entirely  to  the  one  in  charge. 
In  answer  to  the  question  as  to  whether  the  chief  accountant  or 
the  commissioners  attempted  to  supervise  the  work  in  the  field, 
it  was  stated  that  no  such  supervision  was  given.  It  was  further 
stated  that  no  attempt  was  made  to  verify  the  reports  by  working 
papers  or  other  data  taken  from  the  books  by  examiners  of  ac- 
counts or  accountants  engaged  in  making  the  audit.  In  the 
office,  no  Hies  were  found  in  which  working  papers  were  regu- 
larly and  systematically  preserved  for  reference,  it  being  stated 
that  the  responsibility  was  placed  entirely  on  the  chief  examiner 
without  review,  inspection,  or  supervision;  that  the  chief  exam- 
iner preserved  the  working  papers  in  such  manner  and  for  such 
time  as  he  thought  expedient.  For  the  conduct  of  audits  and 
examinations  each  chief  examiner  was  said  to  be  a  law  unto 
himself,  being  left  free  to  develop  his  own  method,  there  being 
no  established  policy  or  prescribed  method  for  guidance,  and  no 
kind  of  check  by  means  of  which  summaries,  exhibits  and  sched- 
ules might  be  verified,  and  the  work  in  the  field  controlled. 

(G)  Methods  of  Making  Audits  and  Examinations  in  the 
Several  Departments  of  the  City 

The  audits  and  examinations  made  by  the  commissioners  of 
accounts  in  the  several  departments  of  the  city  either  fall  under 
the  specific  provisions  of  section  195.,  or  under  the  general  pro- 
visions of  section  119  of  the  charter.  Section  195  provides  that 
the  commissioners  of  accounts  "shall  examine  the  accounts  and 
vouchers  of  all  monies  paid  into  and  paid  out  of  the  city  treas- 
ury" and  "the  amount  of  monies  borrowed  for  or  on  the  credit 
cf  the  city  *  *  *  and  the  amount  of  the  bonds  of  the  city  issued 
*  *  *  with  the  purposes  for  which  and  the  authority  under  which 
such  bonds  were  issued."    This  section  of  the  charter  further 


METHODS  OF  MAKING  AUDITS  AND  EXAMINATIONS  21 

provides  that  "such  commissioners  shall  also  compare  warrants 
drawn  by  the  comptroller  on  the  treasury  *  *  *  with  the  several 
laws  and  ordinances  under  which  the  same  shall  purport  to  have 
been  drawn,  and  shall  in  like  manner  certify  and  report  whether 
the  comptroller  has  power  to  draw  such  warrant." 

Pursuant  to  a  construction  of  provisions  of  the  section  195, 
above  referred  to,  the  office  of  the  commissioners  of  accounts 
now  keeps  the  following  records : 

(1)  Voucher  and  warrant  register  for  the  registra- 
tion of  warrants  serially  by  boroughs. 

(2)  Voucher  and  warrant  registers  for  warrants 
drawn  on  county  funds. 

(3)  A  record  of  chamberlain's  receipts  and  pay- 
ments consisting  of  five  ledgers  in  which  are  kept  ac- 
counts, with  expenditures  and  receipts  by  appropria- 
tions, special  and  trust  funds,  and  sinking  fund  accounts. 

(4)  A  record  of  registered  interest  checks  remain- 
ing unpaid  in  the  hands  of  the  stock  and  bond  clerk 
and  of  stocks  and  bonds  issued  and  cancelled. 

(5)  A  memorandum  record  for  the  purpose  of  con- 
trolling the  accuracy  of  posting  to  the  record  the  cham- 
berlain's receipts  and  payments. 

(6)  Appropriation  ledgers,  and  special  trust  ledgers. 

In  this  relation,  it  is  suggested  that  a  much  broader  and 
better  interpretation  may  be  given  to  the  charter  provision  under 
which  this  work  is  said  to  have  been  done.  The  records  de- 
scribed are  in  the  nature  of  a  duplication  of  the  records  kept  in 
the  office  of  the  comptroller  and  city  chamberlain  to  the  keeping 
of  which  eight  of  the  office  staff  are  regularly  assigned.  These 
books  are  posted  from  vouchers  and  warrants  and  other  original 
data  which  pass  through  the  office.  Section  195  provides  that 
the  commissioners  of  accounts  shall  in  the  month  of  January  of 
each  year  examine  the  accounts  of  the  city  chamberlain.  The 
making  of  a  duplicate  record  and  the  comparison  of  results  does 
not  constitute  an  examination  of  accounts.  This  section  also 
would  seem  to  contemplate  an  audit  of  the  books  of  the  comptrol- 
ler to  determine  whether  or  not  warrants  have  been  drawn  ac- 
cording to  law.  Notwithstanding  the  fact  that  the  law  requires 
the  commissioners  to  "report  whether  the  comptroller  had  power 
to  draw  such  warrant,"  it  is  stated  both  by  the  chief  accountant 
and  by  the  bookkeepers  of  the  office  of  comptroller  that  no  at- 


2  2 


COMMISSIONERS  OF  ACCOUNTS 


tempt  has  been  made  on  the  part  of  the  office  of  the  commission- 
ers of  accounts  to  audit  the  books  of  the  comptroller  and  that 
no  attempt  is  made  to  establish  whether  or  not,  at  the  time  war- 
rants were  drawn,  there  was  a  balance  in  the  appropriation  or 
fund  sufficient  to  meet  the  warrant. 

In  keeping  the  record  of  chamberlain's  receipts  and  pay- 
ments, the  commissioners  accept  as  a  basis  for  the  entries  the 
weekly  "accounts-current''  of  the  chamberlain.  These  weekly 
"accounts-current"  are  supported  by  daily  schedules  submitted  by 
the  chamberlain  to  the  comptroller.  On  receipt  of  the  weekly 
"accounts-current''  by  the  comptroller,  they  are  checked  and 
proved  to  the  schedules.  This  check  is  accepted  by  the  commis- 
sioners of  accounts  without  question,  and  without  going  into  the 
details  of  items  contained  in  the  schedules  supporting  the  debit 
side  of  the  accounts-current.  In  other  words,  the  {auction  of 
the  office  has  heretofore  been  that  of  making  a  duplicate  record 
from  a  secondary  source  where  the  law  contemplates  an  audit. 

In  relation  to  the  duties  imposed  by  charter  with  respect  to 
the  debt  of  the  city,  a  statement  is  prepared  by  the  commissioners 
of  accounts  showing  the  checks  drawn  and  payment  of  interest 
on  registered  stocks  and  bonds,  which  shows  the  balance  paid  and 
unpaid  in  the  hands  of  the  city  chamberlain.  This  statement  is 
drawn  from  a  record  kept  for  the  purpose.  This  record  is  made 
from  sheets  compiled  by  the  stock  and  bond  clerk  and  by  compar- 
ison of  the  same  with  checks  when  returned  to  the  stock  and 
bond  clerk.  The  items  remaining  unchecked  are  totalled,  thus 
showing  the  balance  of  the  interest  fund  remaining  in  the  hands 
of  the  city  chamberlain.  In  the  registry  of  checks  for  the  pay- 
ment of  interest  on  registered  bonds,  however,  no  attempt  is 
made  to  ascertain  whether  or  not  the  accounts  that  show  the  ac- 
cruals of  interest  have  been  properly  kept,  or  whether  the  checks 
drawn  agree  with  the  accruals  as  shown  by  the  record  that  is 
kept. 

Neither  does  the  office  of  the  commissioners  of  accounts  at- 
tempt to  audit  the  books  of  the  stock  and  bond  clerk.  An  ac- 
count-current is  rendered  by  the  stock  and  bond  clerk  showing  the 
principal  amount  received  on  bond  sales,  describing  the  issues  and 
showing  in  detail  whence  the  receipts  were  obtained  as  well  as 
the  amounts  paid  for  redemption  and  cancellation,  which  account- 


MAKES  DUPLICATE  RECORDS  NOT  AUDIT 


23 


current  is  checked  and  a  transcript  thereof  made  in  the  office  of 
the  stock  and  bond  clerk.  But  no  attempt  is  made  to  determine 
the  amount  of  bonds  actually  issued  or  the  amount  of  bonds 
actually  redeemed,  and  no  attempt  is  made  to  verify  the  records 
in  the  office  of  the  stock  and  bond  clerk  from  original  sources 
of  information.  In  cases  where  premiums  are  received  on  bond 
sales,  the  records  show  that  a  premium  has  been  received  and 
that  an  amount  has  been  received  or  paid  as  premium  on  bonds 
issued  or  redeemed.  But  there  is  no  method  employed  by  the 
office  of  the  commissioners  of  accounts  for  the  verification  of  the 
accuracy  of  such  premium,  and  no  attempt  has  been  made  by  the 
office  of  commissioners  of  accounts  to  check  the  cancellation  of 
coupon  bonds  issued  by  the  city. 

With  respect  to  the  audit  of  the  several  departments  of  the 
city,  the  charter  seems  to  give  the  fullest  powers  to  the  com- 
missioners. Xot  only  is  power  given  to  examine,  but  the  charter 
enjoins  a  complete  audit  of  the  receipts  and  disbursements  of  the 
offices  of  comptroller  and  of  the  city  chamberlain,  ''in  connection 
with  those  of  all  of  the  department  and  offices  making  reports 
thereto."  Notwithstanding  this  requirement,  many  of  the  de- 
partments have  been  entirely  ignored,  and  in  the  departments 
where  audits  have  been  made,  it  appears,  from  the  reports  them- 
selves and  from  statements  of  the  examiners,  that  in  many  in- 
stances they  have  fallen  short  of  complete  audits.  In  a  number 
of  departments  receiving  revenue,  the  amount  of  the  cash  actually 
received,  as  shown  by  the  record,  had  been  checked  and  proved 
to  the  amount  of  cash  deposited  with  the  city  chamberlain.  It 
appears,  however,  that  little  or  no  attempt  was  made  to  determine 
whether  or  not  the  city  actually  received  all  of  the  revenue  it 
should  have  received  from  the  sources  indicated. 

An  example  of  this  kind  is  found  in  the  audit  of  the  bureau 
of  licenses  where  the  record  of  the  cash  receipts  is  carefully 
checked  to  the  stubs  of  licenses  issued,  which  stubs  note  the  class 
of  license  issued,  whether  or  not  the  license  was  a  new  license 
or  a  renewal  license,  and  the  amount  of  the  charge  for  such  issue. 
The  examiner  verifies  the  correctness  of  the  charge  according  to 
the  class  noted  on  the  stub  and  checks  this  amount  to  the  cash 
book.  This,  however,  is  not  a  verification  of  the  amount  which 
should  have  been  received,  since  the  clerk  making  the  entry  on 


24 


COMMISSIONERS  OF  ACCOUNTS 


the  stub  might  have  made  a  mistake  to  the  advantage  of  the 
cashier,  or  there  might  have  been  collusion  between  the  license 
clerk  and  the  cashier  without  discovery;  no  adequate  method  or 
complete  check  is  employed  for  determining  whether  or  not  the 
notation  on  the  stub  used  in  verifying  the  cash  is  properly  made. 
In  one  of  the  license  bureaus  it  was  recently  discovered  that  such 
collusion  did  exist,  it  being  a  regular  practice  to  enter  up  a  new 
license  as  a  renewal.  The  charge  for  a  new  license  being  in  most 
instances  double  the  charge  of  a  renewal  license,  failure  to  de- 
termine whether  the  license  as  issued  corresponds  to  the  notation 
on  the  stub,  gives  to  employees  of  the  bureau  of  licenses  an  op- 
portunity to  divert  to  their  own  use  a  considerable  portion  of  the 
city's  revenue.  Another  example  of  this  kind  is  found  in  the  de- 
partment of  water  supply,  gas  and  electricity.  The  method  of 
audit  is  that  of  proving  that  the  record  of  cash  shown  on  the  cash 
books  is  clerically  correct  and  corresponds  to  the  record  of  cash 
received  from  the  department  of  water  supply,  gas  and  electricity 
by  the  city  chamberlain.  These  cash  records  are  checked  in  de- 
tail, the  cash  record  in  the  meter  division,  which  is  a  copy  of 
the  record  kept  in  the  regular  rate  book  so  far  as  pertains  to  the 
meters,  being  checked  back  in  detail  to  the  regular  rate  book. 
Aside  from  proving  the  clerical  accuracy  of  the  cash  records  and 
verifying  the  deposits  with  the  city  chamberlain,  it  could  not  be 
ascertained  that  the  audit  has  any  particular  value.  It  is  de- 
fective in  the  following  respects :  The  charges  on  the  regular 
rate  book  against  properties  are  not  verified  as  to  proper  charges ; 
the  regular  rate  books  are  not  footed  and  balanced;  the  charges 
on  the  meter  rate  books  are  not  verified  as  to  proper  charges; 
the  meter  books  are  not  footed  and  balanced ;  no  attempt  is  made 
to  determine  whether  or  not  the  total  amount  shown  on  the 
regular  rate  books  and  the  total  amount  shown  on  the  meter 
books  are  accounted  for  in  cash  collection  and  arrears,  as  such 
arrears  appear  on  the  books  of  the  bureau  of  assessments  and 
arrears.  The  audit  does  not  extend  to  departmental  expendi- 
tures; neither  is  inquiry  made  as  to  whether  these  expenditures 
are  according  to  law;  nor  as  to  whether  vouchers  drawn  for  the 
issue  of  warrants  are  for  the  payment  of  proper  claims  against 
the  city.  The  significance  of  lack  of  inquiry  of  the  character  last 
mentioned  is  further  illustrated  in  the  investigation  recently  made 


CONDITIONS  WITHIN  THE  SEVERAL  DEPARTMENTS  25 


of  the  office  of  the  borough  president  of  Manhattan  which  has 
been  regularly  audited  by  the  commissioners  of  accounts. 

(H)  Conditions  Within  the  Several  Departments  Unfavor- 
able to  the  Making  of  Effective  Audits  and  Examination 

While  it  is  admitted  by  all  parties  concerned  that  the  ex- 
aminations and  audits  heretofore  made  by  the  commissioners  of 
accounts  have  not  been  what  they  should  have  been,  the  failure  to 
meet  all  of  the  requirements  of  the  charter  must  be  considered  in 
the  light  of  the  conditions  under  which  the  office  has  been  re- 
quired to  operate.  The  office,  with  its  present  staff  and  budget, 
could  not  have  made  complete  audits  of  all  the  departments  of 
the  city.  Under  present  conditions,  this  could  not  have  been 
done  even  with  a  much  larger  number  of  examiners;  with  few 
exceptions  the  revenue  accounts  of  city  departments  are  not 
under  control;  when  expense  accounts  are  kept,  as  distinct  from 
appropriation  accounts,  these  are  not  under  control.  With  such 
accounting  conditions  prevailing,  the  only  method  by  which  a 
complete  audit  may  be  made  is  by  means  of  a  check  in  detail. 
A  verification  of  revenue  accounts,  for  example,  would  involve 
a  detail  check  of  revenue  charges  and  a  detail  check  of  revenue 
collections  against  these  charges.  Were  the  records  of  revenue 
charges  under  control,  these  might  be  currently  checked  and 
proved  by  the  administrative  staff  of  the  respective  departments. 
In  such  case,  the  checking  in  detail  of  all  transactions  shown  in 
the  subsidiary  records  would  give  way  to  a  verification  of  con- 
trolling methods  and  accounts,  and  to  the  determination  of  the 
fact  as  to  whether  the  control  as  exercised  by  the  regular  account- 
ing officers  is  effective.  Under  a  controlled  method  of  account- 
ing the  labor  involved  in  the  making  of  a  thorough  audit  is  but 
a  small  portion  of  the  labor  required  in  making  an  audit  of  ac- 
counts not  under  control. 

In  no  place  is  a  better  illustration  to  be  found  of  defective 
methods  of  accounting  than  in  the  two  departments  mentioned, 
the  bureau  of  licenses,  and  the  department  of  water  supply,  gas 
and  electricity.  If  a  plan  had  been  studiously  devised  to  defeat 
a  thorough  audit  it  could  not  have  been  more  effective  than  the 
form  of  accounting  at  present  used  in  the  bureau  of  licenses. 
To  an  extent  the  same  conditions  prevail  in  the  department  of 


26 


COMMISSIONERS  OF  ACCOUNTS 


water  supply,  gas  and  electricity.  It  is  most  difficult  under 
present  conditions  even  to  prove  the  clerical  accuracy  of  the 
books.  The  ledgers  of  the  department  are  not  currently  bal- 
anced. Proof  of  the  assets  of  the  city  as  at  present  contained  in 
the  form  of  charges  for  water  would  employ  a  staff  continuously. 
A  part  of  the  problem  of  obtaining  a  proper  audit  of  the  books 
of  the  city  is,  therefore,  to  devise  and  install  a  system  that  would 
lend  itself  to  proof  and  control  with  greater  facility  and  less  cost 
than'  do  the  present  accounting  methods. 

(I)  Qualifications  and  Efficiency  of  the  Staff 

■With  a  view  to  determining  the  experience  and  special  qual- 
ifications of  the  various  members  of  the  staff  of  the  office,  all  of 
the  chief  examiners,  all  of  the  accountants  and  a  number  of  the 
examiners  of  accounts  were  interviewed,  as  well  as  members  of 
the  engineering  bureau.  While  it  is  not  our  purpose  at  this  time 
to  report  upon  the  specific  qualifications  of  each  of  these  persons, 
we  were  able  to  secure  from  them  a  general  statement  with  respect 
to  their  experience  previous  to  appointment,  and  their  views,  if  any, 
with  regard  to  strengthening  and  enlarging  the  scope  of  the 
office's  activity.  We  shall  furnish  in  a  separate  report  the  de- 
tails of  these  interviews,  inasmuch  as  they  are  confidential  in 
character  and  relate  only  generally  to  the  subject  matter  of  this 
report.  It  may  be  said  broadly,  however,  that  no  standards  of 
efficiency  have  been  established  in  this  office;  that  appointments 
have  been  made  in  many  instances  for  purely  personal  or  political 
reasons;  that  no  attempt  has  been  made  to  grade  or  ascertain 
in  a  methodical  manner  the  special  fitness  of  any  of  the  em- 
ployees; that  so  far  as  we  have  been  able  to  ascertain,  promo- 
tions are  not  based  either  upon  length  of  service  or  upon  char- 
acter of  the  work,  but  upon  the  ability  of  the  employee  to  secure 
a  hearing  for  his  request  for  increase  of  salary. 

Irregularities 

In  the  course  of  this  examination  certain  practices  were  re- 
ported concerning  which  it  seemed  necessary  to  make  specific 
inquiry  before  reporting  on  the  conduct  of  the  office.    The  prac- 


IRREGULARITIES 


27 


tices  referred  to  were  in  the  nature  of  alleged  violations  of  sec- 
tion 1561  of  the  charter  which  provides  that: 

"Xo  officer  or  employe  of  The  City  of  New  York  *  *  * 
shall  detail  or  cause  any  officer,  employe,  or  subordinate  of 
the  city  *  *  *  to  do  or  perform  any  work,  outside  of  his 
public  office,  work  or  employment" 

Such  regulation  being  for  the  protection  of  the  office,  the  re- 
ported infractions  of  it  were  first  discussed  with  the  commis- 
sioners and  later  taken  up  with  the  examiners,  accountants  and 
office  staff.  A  number  of  the  employees  of  the  office  made  spe- 
cific statements  to  the  effect  that  they  had  been  detailed  to  work 
for  the  private  accounting  firm  of  Hertle.  Cook  and  Decker,  of 
which  firm  one  of  the  commissioners  and  the  auditor  of  the 
board  of  education  are  members.  One  Chailes  D.  Schenck,  an 
accountant  in  the  office  of  commissioners  of  accounts,  made  an 
affidavit  in  which  he  stated  that  he  had  worked  on  one  audit  of 
said  accounting  firm  for  about  rive  weeks,  and  on  another  audi: 
for  about  one  week,  from  0  A.  M.  to  5  P.  M..  curing'  ail  of  which 
time  he  had  received  full  compensation  as  an  employee  of  the 
city:  that  he  had  been  assigned  to  the  work  and  was  compensated 
therefor  by  Commissioner  Hertle :  and  that  no  part  of  this  work 
was  performed  during  his  vacation  time.  This  affidavit  was 
corroborated  by  depositions,  said  corroborating  evidence  being 
hereto  attached,  marked  "Exhibit  B." 

It  should  be  said  that  while  admitting  that  he  assigned 
men  to  work  for  his  private  firm.  Commissioner  Hertle  denies 
having  any  knowledge  of  their  having  been  employed  in  such 
capacity  during  the  regular  office  hours  of  the  city. 

The  significance  of  this  alleged  stare  of  affairs  is  self-evident. 
The  protection  of  the  rights  of  the  city  requires  that  all  con- 
tracts and  claims  against  the  city  should  be  carefully  scrutinized. 
To  the  end  that  improper  payment  may  not  be  made  the  charter 
provides :  { 1 )  for  the  audit  of  all  bills  and  vouchers  presented 
before  payment :  (2)  for  the  audit  of  the  accounts  of  all  offices 
through  which  expenditures  are  made.  It  goes  without  saying 
that  private  firm  relations  should  not  exist  between  a  claim- 
ant and  the  auditor  of  his  claim  presented  for  payment,  or  be- 
tween an  officer  audited  and  the  auditor  of  his  accounts.  The 
commissioner  and  the  departmental  auditor  referred  to  in  these 
depositions,  b)\  entering  into  a  private  firm  and  by  adz'ertising 


28 


COMMISSIONERS  OF  ACCOUNTS 


widely  their  official  connection  with  the  city\,  placed  themselves 
in  such  position  as  might  cause  persons  dealing  with  the  city, 
either  as  licensees  or  as  vendors,  to  think  that  some  advantage 
might  accrue  from  entering  into  professional  and  confidential 
relations  with  them.  Moreover,  the  maintaining  of  such  private 
relations  between  the  two  officers  themselves  deprived  the  city 
itself  of  protection  against  imputation  of  collusion;  the  auditor 
of  the  board  of  education  approves  for  payment  millions  of  dol- 
lars of  bills  for  supplies  and  claims  under  contract  for  buildings ; 
his  accounts,  if  audited  at  all  would  be  audited  by  his  partner  in 
private  business.  The  menace  to  the  city's  interest  is  emphasized 
by  the  fact  that  most  of  the  malfeasance  in  office  has  to  do  with 
contracts,  and  that  subversions  of  this  kind  are  the  most  difficult 
to  detect.  The  commissioner  of  accounts  in  these  private  rela- 
tions, placed  himself  in  the  position  of  a  judge  consenting  to  try 
a  case  in  which  his  law  firm  is  interested.  If  the  borough  presi- 
dent and  the  commissioner  of  accounts  were  associated  together 
in  a  contracting  business,  the  commissioner  auditing  the  accounts 
of  the  borough  president,  it  would  not  be. necessary  to  prove  that 
the  firm  has  business  relations  with  those  who  are  furnishing 
supplies  to  destroy  confidence  in  the  office  to  which  the  mayor 
and  the  people  look  for  independent  judgment  and  protection. 

(J)  Possibilities  of  the  Office  of  Commissioners  of  Accounts 

One  of  the  chief  considerations  presented  at  the  time  the 
bureau  was  requested  to  undertake  the  examination  was  "the 
wish  of  his  Honor,  Mayor  McClellan,  to  so  organize  the  office 
of  the  commissioners  of  accounts  that  it  will  fulfill  in  the  most 
effective  manner  possible  the  functions  imposed  upon  it  by  the 
charter." 

If  it  is  to  be  an  auditing  office,  then  shall  the  commissioners 
attempt  to  audit  bills  or  claims  before  payment,  or  shall  they  hold 
the  comptroller  and  the  city  chamberlain  responsible  for  control 
over  payments  and  enforce  this  responsibility  through  audits 
and  examinations  by  the  commissioners  ?  Is  it  desirable  that  the 
office  shall  be  held  responsible  for  systems  of  account  and  admin- 
istrative control  as  exercised  through  the  comptroller  and  the 
accounting  officers  of  the  city,  or  shall  the  commissioners  ascer- 


POSSIBILITIES  OF  OFFICE 


29 


tain  and  report  the  defects  in  accounting  methods  and  recom- 
mend improvements? 

These  questions  are  of  most  serious  and  far-reaching  import. 
The  office  of  commissioners  of  accounts,  under  the  charter,  is 
attached  to  and  under  the  control  of  the  chief  executive.  A 
special  agency  for  accounting  control  has  been  created  at  the 
head  of  which  is  the  comptroller,  who,  under  the  charter,  is  in- 
dependent of  the  executive,  and  directly  responsible  to  the  people. 
Not  only  is  the  comptroller  made  an  independent  officer  of  ac- 
counting control,  but  the  charter  also  provides  (§149)  that  he 
''shall  prescribe  the  forms  of  keeping  and  rendering  all  city  ac- 
counts." The  comptroller  is,  therefore,  responsible  not  only  for 
the  exercise  of  proper  accounting  control,  but  also  for  the  means 
or  mechanism  by  which  that  control  may  be  made  effective.  As 
an  incident  to  his  control,  as  well  as  to  his  responsibility  for  the 
protection  of  the  funds  of  the  city,  there  is  created  in  the  depart- 
ment of  finance  a  bureau  for  the  audit  of  bills  presented  and 
claims  against  the  city  before  warrants  are  drawn  for  payment 
(§151  par.  4).  The  employees  in  this  bureau  may  be  appointed 
and  removed  by  the  comptroller  at  pleasure. 

"What  the  bureau  of  audit  of  the  finance  department  is  to  the 
comptroller,  the  commissioners  of  accounts  are  to  the  mayor. 
The  comptroller  is  responsible  for  the  payment  of  bills  and  for 
the  exercise  of  accounting  control  over  the  city.  The  responsi- 
bilities of  the  mayor  are  of  a  far  different  order.  Under  §115  of 
the  charter  it  is  made  the  duty  of  the  mayor : 

(1)  "to  communicate  to  the  board  of  aldermen  [as  the  rep- 
resentative of  the  people]  at  least  once  in  each  year,  a  gen- 
eral statement  of  the  government  and  improvements  of  the 
city ; 

(2)  "to  recommend  to  the  board  of  aldermen  all  such  meas- 
ures as  he  shall  deem  expedient; 

(3)  "to  keep  himself  informed  of  the  doings  of  the  several 
departments ; 

(4)  "to  be  vigilant  and  active  in  causing  the  ordinances  of 
the  city  and  the  laws  of  the  state  to  be  executed  and  en- 
forced." 

It  is  in  direct  relation  to  these  duties  and  responsibilities  that 
power  is  given  to  the  mayor  to  "appoint  and  remove  at  pleasure 
two  commissioners  of  accounts."  (§119.)  To  the  end  that  he 
may  "keep  himself  informed  of  the  doings  of  the  several  depart- 
ments," that  his  report  to  the  board  of  aldermen  may  bear  the 


3° 


COMMISSIONERS  OF  ACCOUNTS 


stamp  of  authenticity,  that  his  recommendation  of  measures  may 
be  made  on  information  and  not  on  belief,  the  charter  enjoins 
on  the  commissioners  as  "their  duty,  once  in  three  months,  to 
make  an  examination  of  the  receipts  and  disbursements  in  the 
offices  of  the  comptroller  and  chamberlain,  in  connection  with 
those  of  all  the  departments  and  offices  making  returns 
thereto,  and  to  report  to  the  mayor  a  detailed  and  classified  state- 
ment of  the  -financial  conditions  as  shown  by  such  examinations." 
This  section  would  seem,  therefore,  not  only  to  lay  the  founda- 
tion for,  but  to  require  a  complete  audit  as  an  aid  to  the  exercise 
of  executive  control  over  the  affairs  of  the  city.  The  responsi- 
bility of  the  mayor  for  administrative  control  is  further  pro- 
tected in  the  charter  by  requiring  that  the  commissioners  of  ac- 
counts "shall  also  make  such  special  examinations  of  the  ac- 
counts and  methods  of  the  departments  and  offices  of  the  city 
and  of  the  counties  of  New  York,  Richmond,  Queens  and  Kings, 
as  the  mayor  may,  from  time  to  time,  direct,  and  such  other 
examinations  as  the  said  commissioners  may  deem  for  the  best 
interests  of  the  city,  and  report  to  the  mayor  and  the  board  of 
aldermen  the  results  thereof."  To  make  the  power  of  audit  and 
examination  effective  the  clause  is  added:  "For  the  purpose  of 
ascertaining  facts  in  connection  with  these  examinations  they 
shall  have  full  power  to  compel  the  attendance  of  witnesses,  to 
administer  oaths  and  to  examine  such  persons  as  they  may  deem 
necessary." 

To  a  large  extent,  heretofore,  these  charter  functions  have 
been  undeveloped.  With  its  legal  powers  of  audit  and  inquisi- 
tion, the  office  of  commissioners  of  accounts  possesses  possibilities 
which  are  not  possessed  by  any  other  branch  of  the  government; 
were  these  possibilities  fully  realized,  the  mayor  might  have  regu- 
larly reported  to  him,  not  only  an  audited  statement  of  financial 
and  departmental  accounts,  but  he  might  also  have  an  independ- 
ent inquiry  into  every  contractual  relation  and  transaction  of 
the  city  which  is  not  fully  shown  on  the  records.  Nor  are  the 
commissioners  dependent  on  the  mayor  for  the  initiation  of  any 
inquiry  which  they  may  deem  proper  to  make-  They  are  respon- 
sible for  independent  action,  in  that  the  charter  has  conferred  on 
them  all  the  powers  to  examine  and  report  that  could  be  con- 
ferred on  a  commission  specially  appointed  by  the  legislature. 


REORGANIZATION  SUGGESTED 


31 


Constructive  Suggestions 

The  intention  of  his  Honor  "to  make  this  an  active  agency  for 
carrying  out  a  program  of  research  and  investigation  which  will 
show  where  the  government  of  the  city  should  be  strengthened 
and  its  efficiency  increased"  would  seem  to  require 

(1)  That  the  office  of  commissioners  of  accounts 
be  so  reorganized  as  to  make  it  an  instrument  of  inde- 
pendent audit  and  examination. 

(2)  That  the  methods  of  the  office  should  be  such 
as  to  make  this  organization  effective. 

Reorganization  of  the  Office 

To  the  end  that  the  office  may  be  freed  from  all  responsi- 
bility for  accounting  and  for  participation  in  administrative  ac- 
tivities which  it  may  be  called  on  critically  to  examine,  the  fol- 
lowing changes  are  suggested : 

(1)  That  those  who  have  been  assigned  to  book- 
keeping and  clerical  work  in  other  offices  not  under 
the  control  of  the  commissioners,  be  transferred  to  the 
pay  rolls  of  those  offices  and  proper  provisions  be 
made  therefor  in  the  departmental  budgets. 

(2)  That  the  duplicate  records  of  accounts  kept 
in  the  office  of  the  commissioners  of  accounts  be  discon- 
tinued. 

(3)  That  the  bureau  of  engineering,  as  such,  be 
abolished,  or  that  the  examining  inspectors  be  trans- 
ferred to  the  finance  department. 

The  reasons  for  these  suggested  changes  are  apparent: 

(1)  An  office  should  not  be  expected  both  to  keep  accounts 
and  at  the  same  time  to  audit  them ;  by  such  an  arrangement  the 
principal  benefits  of  an  audit  are  lost.  (2)  The  duplication  of 
accounts  in  the  office  of  the  commissioners  is  not  only  unneces- 
sary and  uneconomical,  but  as  a  method  of  verification  it  is  in- 
adequate. (3)  The  bureau  of  engineering,  by  attempting  to  in- 
spect work  in  progress  under  contracts,  prior  to  the  payment  of 
claims  against  the  city,  is  performing  a  function  which  should 
be  performed  by  the  comptroller.  It  thus  permits  the  comptrol- 
ler to  shift  a  responsibility  which  he  alone  should  carry,  for  if  a 
claim  is  paid  for  work  which  is  not  according  to  contract  the 
comptroller  may  now  say  that  the  work  was  inspected  and  passed 
by  the  commissioners.    Furthermore,  the  commissioners  are  pre- 


32 


COMMISSIONERS  OF  ACCOUNTS 


eluded  from  making  an  impartial  examination  of  claims  paid 
when  they  are  parties  to  the  passing  of  bills. 

When  Chief  Engineer  Klein  and  Assistant  Engineers  Wel- 
ton  and  Gormly  were  questioned  as  to  the  advantage  to  the  city 
of  having  inspections  of  work  in  progress  regularly  conducted 
by  the  office  of  the  commissioners  of  accounts,  they  stated  that 
under  present  conditions  the  work  of  the  bureau  of  engineering 
could  not  be  made  effective  for  the  following  reasons :  ( I )  No 
control  can  be  exercised  over  the  personnel  of  the  bureau  by  the 
one  in  charge  of  an  inspector,  since  he  is  required  to  accept  such 
persons  as  are  assigned  to  duty  without  inquiry  as  to  qualifica- 
tions, and  since  it  is  known  to  the  head  of  the  bureau  that  in  many 
instances  men  are  assigned  as  inspectors  who  are  incompetent. 
(2)  The  work  of  inspection  relates  primarily  to  the  determina- 
tion of  the  validity  of  claims  and  to  amounts  properly  chargeable 
against  the  city  under  contracts;  this  work  is  not  in  any  manner 
correlated  with  the  department  of  finance  where  bills  are  passed ; 
and  the  only  method  or  means  by  which  any  official  cognizance 
can  be  taken  of  inspections  made  by  the  bureau  is  through  a  re- 
port to  the  commissioners  of  accounts,  whose  duties  in  turn 
relate  primarily  to  the  audit  of  accounts  and  the  making  of  special 
examinations  and  not  to  the  audit  of  bills  or  claims  against  the 
city  for  payment.  It  was  further  stated  as  the  opinion  of  the 
engineers  that  it  would  be  of  advantage  to  have  a  common  labo- 
ratory in  the  city  for  the  making  of  all  chemical  and  physical  tests 
which  would  be  independent  of  the  action  of  any  department  or 
bureau  for  whom  such  tests  were  made,  such  laboratory  to  be 
responsible  to  the  mayor  only. 

To  the  end  that  the  working  staff  of  the  office  may  be  so 
organized  as  to  permit  of  its  most  effective  use,  the  following 
changes  are  suggested: 

(1)  that  the  engineers  now  employed  in  the  bureau 
of  engineering  be  retained  in  the  department  as  engi- 
neering inspectors,  advisory  to  the  commissioners,  and 
that  the  salaries  of  those  receiving  less  than  $3,500 
per  annum  be  increased  to.  comport  with  the  charac- 
ter of  their  training  and  service ; 

(2)  that  seven  additional  places  be  created  in  the 
grade  "chief  examiner  of  accounts"  to  permit  of  the 
payment  of  salaries  sufficient  to  enable  the  commission- 
ers to  obtain  an  adequate  supervising  staff; 


EXPLANATION  OF  CHANGES  SUGGESTED 


33 


(3)  that  adequate  provision  be  made  in  the  budgets 
for  maintaining  a  staff  of 

15  chief  examiners  of  accounts,  (increase  7) 
30  accountants,  (increase  8) 

16  examiners  of  accounts,  (no  change) 
7  clerks,  (no  change) 

3  engineering  examiners,  (no  change) 
9  examining  inspectors,  (no  change) 

(4)  That  as  a  prerequisite  to  the  appointment  to  the 
grade,  chief  examiners  of  accounts,  the  applicant  shall 
have  had  at  least  five  years  of  experience  as  account- 
ant in  the  office  of  a  public  accountant;  that  applicants 
for  appointment  to  the  classes,  "accountant"  and  "exam- 
iners of  accounts"  shall  have  had  a  similar  accounting 
experience,  or  shall  have  the  title  "certified  public  ac- 
countant," as  conferred  by  the  board  of  regents  of  the 
University  of  the  State  of  New  York. 

As  reasons  for  the  changes  above  suggested,  it  is  submitted: 
(1)  The  engineering  inspectors  would  not  only  be  under  the 
direct  control  of  the  commissioners  of  accounts,  but  their  work 
would  pertain  to  audits  and  special  examinations,  instead  of 
being  carried  on  in  a  bureau,  the  purpose  of  which  is  to  inspect 
work  in  progress  prior  to  the  payment  of  bills.  Under  the  direct 
supervision  of  the  commissioners  the  purpose  of  engineering  ex- 
aminations would  be  to  investigate  the  methods  of  current  inspec- 
tion as  performed  by  the  comptroller  and  to  perform  such  other 
service  as  would  be  of  value  in  the  inquisitorial  work  of  the 
office.  (2)  One  of  the  chief  obstacles  would  be  removed  to  ob- 
taining men  of  technical  training  and  of  experience  in  accounting 
necessary  to  give  proper  direction  to  audits  and  examinations  in 
progress.  In  the  grades  established  by  the  civil  list  there  is  only 
one  class  which  permits  salaries  sufficient  to  make  the  supervis- 
ing positions  attractive — "chief  examiner  of  accounts."  In  order 
to  overcome  this  serious  defect — lack  of  proper  supervision — it  is 
suggested  that  there  should  be  fifteen,  instead  of  eight,  employees 
in  the  class  "chief  examiner  of  accounts."  This  change  would 
enable  the  commissioners  of  accounts  so  to  organize  their  office 
as  to  utilize  the  inferior  grades  of  service  to  good  effect.  (3) 
While  these  recommendations  call  for  a  slight  increase  in  the 
financial  support  to  be  given  to  the  department,  this  increase  is 
not  material  when  compared  with  the  increase  of  efficiency  they 
would  make  possible.    The  city  could  not  spend  its  revenue  in  a 


54 


COMMISSIONERS  OF  ACCOUNTS 


more  judicious  manner  than  to  grant  whatever  may  be  needed 
to  insure  efficiency  in  the  office  of  the  commissioners  of  accounts. 
(4)  The  suggestions  as  to  the  qualifications  prerequisite  to  ap- 
pointment to  the  grades  "chief  examiner  of  accounts,"  "account- 
ant" and  "examiner  of  accounts"  are  made  to  the  end  that  tech- 
nical training  be  adopted  as  an  essential.  There  is  no  political 
or  personal  consideration  that  should  stand  in  the  way  of  obtain- 
ing such  qualifications.  Without  efficient  men  as  his  technical 
advisors  the  mayor's  influence  must  necessarily  fall  short  of  his 
charter  position,  both  in  the  board  of  estimate  and  apportion- 
ment and  as  executive.  The  exercise  of  executive  and  discre- 
tionary power  must  rest  on  superior  intelligence.  Whatever  is 
necessary  therefore  to  increase  the  efficiency  of  the  office  of  com- 
missioners of  accounts  will  aid  materially  to  the  efficiency  of 
every  department  over  which  the  chief  executive  presides. 

Changes  Suggested  in  Methods  of  Conducting  the  Office 

As  a  means  of  making  the  organization  effective  the  methods 
of  the  office  should  be  radically  changed.  Constructive  sugges- 
tions as  to  methods  relate  themselves  to  three  general  subjects: 

(1)  Central  control  over  the  staff  and  results; 

(2)  The  records  and  files  of  the  office; 

(3)  The  work  in  the  field. 

A  method  should  be  introduced  by  which  the  work  of  the 
staff  and  its  results  may  be  centrally  supervised,  checked  and 
controlled.  Instead  of  accepting  the  reports  of  accountants  in 
the  field  without  question  or  supervision,  a  method  of  audit  and 
examination  should  be  established  and  enforced  through  adequate 
provision.  Each  report,  supported  by  adequate  working  papers, 
should  be  submitted  to  a  department  or  office  staff,  whose  duty 
it  would  be  to  check  the  accuracy  of  statements  and  exhibits  of 
the  details  supporting  them.  These  working  papers  should  be 
in  such  form  as  to  show  the  work  performed  and  the  manner  in 
which  it  is  performed.  After  the  report,  in  draft,  properly  scru- 
tinized and  approved  as  to  form  and  contents,  has  been  type- 
written, it  should  be  checked  and  verified.  Those  checking  and 
verifying  the  same  should  be  required  to  place  thereon  their 
initials  as  a  means  of  locating  responsibility  for  errors.  The 
original  draft,  the  working  papers  and  supporting  data,  with  a 


TIME  SHEETS  NECESSARY 


35 


copy  of  the  report  rendered  and  the  proving  copy,  should  then  be 
carefully  filed  and  preserved  for  reference.  This  will  not  only 
serve  for  guidance  as  to  the  ground  covered  by  the  preceding 
audit, 'but  will  also  enable  the  commissioners  to  develop  an  esprit 
de  corps  which  would  not  be  possible  when  no  requirement  is 
made  or  enforced  looking  toward  central  control. 

In  the  past  the  staff  has  been  organized  in  regular  squads, 
certain  employees  being  continuously  assigned  to  a  chief  examiner 
who  for  years  conducts  the  audits  of  certain  departments.  The 
defects  of  this  method  of  conducting  the  audits  of  a  great  insti- 
tution like  New  York  City  are  palpable.  In  the  first  place,  each 
department  audited  knows  who  will  be  assigned  to  the  work.  In 
the  second  place,  it  narrows  the  experience  of  both  the  account- 
ants in  charge  and  their  subordinates  to  the  accounts  of  a  particu- 
lar division.  After  an  experience  of  over  twenty  years  there  is 
not  an  employee  in  the  office  who  has  a  full  and  comprehensive 
notion  of  the  system  of  accounts  kept  by  the  city.  Again,  the 
practice  tends  to  destroy  working  efficiency  in  that  it  gives  little 
opportunity  for  one  on  the  staff"  to  demonstrate  ability,  and  little 
encouragement  to  work  except  in  a  perfunctory  way. 

As  a  further  suggestion,  it  is  urged  that  each  accountant, 
clerk  and  inspector  have  an  individual  time  sheet  which  he  shall 
fill  out  and  return  to  the  office  each  week,  showing  (a)  the  en- 
gagements on  which  he  worked;  (b)  the  hours  each  day  em- 
ployed; (c)  the  character  of  the  work  each  day  performed;  and 
(d)  the  accountant  to  whom  he  was  responsible;  these  time  sheets 
to  be  verified  and  approved  by  such  accountants  in  charge  and 
filed  as  a  part  of  the  records  of  the  office.  The  pay-rolls  should 
be  made  up  from  the  time  reports  so  rendered,  and  certified  by 
the  chief  clerk  before  being  approved  by  the  commissioners. 

BUREAU  OF  MUNICIPAL  RESEARCH 
Henry  Bruere,  Director 
F.  A.  Cleveland,  Technical  Director 

August  19,  1907 


BUREAU  OF  MUNICIPAL  RESEARCH 


HISTORY 

January  ist,  1906  Organized  as  "  Bureau  of  City  Betterment " 
May  3d,  1907        Incorporated  as  "Bureau  of  Municipal  Research  " 

PURPOSES 

To  promote  efficient  and  economical  municipal  government ;  to  promote 
the  adoption  of  scientific  methods  of  accounting  and  of  reporting  the 
details  of  municipal  business,  with  a  view  to  facilitating  the  work  of 
public  officials ;  to  secure  constructive  publicity  in  matters  pertaining 
to  municipal  problems  ;  to  collect,  to  classify,  to  analyze,  to  correlate, 
to  interpret  and  to  publish  facts  as  to  the  administration  of  municipal 
government. 

REPORTS,  JANUARY,  1906,  to  AUGUST,  1907 

Some  Phases  of  the  Work  of  the  Department  of  Street  Cleaning 
(in  print) 

City  Owned  Houses 

Led  to  the  appointment  of  a  commission  by  the  mayor  to  devise  a 
method  of  abolishing  and  preventing  the  recurrence  of  unsanitary  and 
illegal  conditions  found  in  tenements  owned  by  the  city. 

Salary  Increases  Not  Provided  for  in  Budget 

Inefficiency  of  Inspection  of  Combustibles 
Led  to  the  dismissal  of  superintendent. 

The  City  of  New  York,  the  Street  Railroad  Companies  and  a  Million  and 
a  Half  Dollars 

Led  to  the  establishment  of  a  special  bureau  in  the  city's  law  depart- 
ment to  take  up  and  press  the  claims  of  the  city  against  street  railroad 
companies  for  paving  done  at  the  public's  expense  between  the  com- 
panies' rails. 

How  Manhattan  is  Governed 

Led  to  investigation  by  the  commissioners  of  accounts,  upon  whose 
findings  the  City  Club  brought  charges  before  Governor  Hughes 
demanding  the  removal  of  Borough  President  Ahearn.  Hearing  set 
for  September  10th. 

Analysis  of  the  Salary  Expenditure  of  the  Department  of  Health  of  the 
City  of  New  York  for  the  Year  1906 
Led  to  the  adoption  of  the  principle  by  the  board  of  aldermen  and  the 
board  of  estimate  and  apportionment  that  future  budgets  should  clearly 
indicate  for  what  specific  purposes  the  money  voted  is  to  be  expended. 

Making  a  Municipal  Budget ;  functional  Accounts  and  Records  for  the 
Department  of  Health   (in  print) 

A  Department  of  Municipal  Audit  and  Examination  ;  Report  on  the  Office 
of  Commissioners  of  Accounts 
Re-organization  effected  by  the  commissioner,  with  the  approval  of 
the  mayor. 


